Bitcoin Correlation To S&P 500 Drop, Can BTC Stay Above $58K?

Over the past five years, the two have been highly positively correlated during the pandemic period and from the end of 2021 to 2022. At the beginning of 2024, both showed significant increases. However, despite the SPX continuously reaching new highs, BTC has been hovering around $60,000, occasionally falling below this level.

Since 2019, BTC and SPX have shown negative correlation four times, each time indicating a local low point in Bitcoin prices. This suggests that while the traditional stock market continues to perform strongly, Bitcoin's performance has been more volatile and less predictable. The divergence in the correlation between the two could be an indication of a shift in market dynamics, with Bitcoin potentially becoming less influenced by traditional market movements.

I would think that we should look closely at other indicators for Bitcoin when we are planning to trade Bitcoin.

One of them would be the daily transaction as we can see that it has been dropping over the past few days with a slight increase recently, but is that enough to move Bitcoin price higher?

One of the consideration would be investors are putting money into Bitcoin as diversification of their assets because of interest rate and economic uncertainty.

With the inflation slowing down and rate cut coming up, would Bitcoin still be attractive?

As mentioned in previous section, we could see that investors might not be coming into Bitcoin as alternative assets, because inflation is slowing down and also rate cut is impending.

So investors could stay in the equities market, as seen from the number of new addresses on the Bitcoin network, we can see that there is a decline recently.

And this trend would still be going down, because new addresses normally would be accounts that is coming to buy Bitcoin.

I would be expecting Bitcoin to trade range bound between $57,000 to $58,000, for Bitcoin to go above the $58K level, we might need to see some correction happening on the S&P 500.

I do not think we would want to see some correction on the S&P 500, but we can watch the recent tech stocks recovery closely.

Appreciate if you could share your thoughts in the comment section whether you think Bitcoin would continue to trade range bound while S&P 500 make the tech recovery?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.